The off-premise consideration set

“Certainly any restaurant should be evaluating their delivery strategy,” said Melissa Wilson, managing principal with Technomic. But as more brands add it, the playing field may level out. That means differentiation and a clear plan will become even more important, and operators need to evaluate everything from menu to operations. As Noodles & Co. CEO Dave Boennighausen said during the chain’s most recent earnings call, the chain’s “disciplined approach” to delivery has been critical to a seamless integration. Read on for a look at what to consider when taking stock of off-premise plans.

Packaging

Packaging that was originally designed for leftovers doesn’t work to communicate a brand in the delivery space, said Wilson. And operators are pushing the supplier community to come up with new solutions. Part of the reason, she added, is that consumers have raised their expectations of off-premise food over the last few years, no longer giving restaurants as much of a pass on out-of-restaurant meals being of lesser quality.

Both Red Robin and IHOP are among the brands that have already redeveloped packaging with takeout and delivery in mind. Red Robin’s enhancements include a switch to recyclable materials, a transparent lid to ensure order accuracy by sight and ventilation to prevent sogginess. And IHOP’s new double-layer packaging was created with its signature breakfasts in mind, with eggs and meat on the bottom and pancakes on a second layer of the container. The pancake piece holds the baked goods in place, and the heat from the food underneath keeps everything warm, all with vents to keep the food from getting soggy.

Packaging innovations aren’t just about preserving the food quality and temperature. Operators are also concerned about food safety as more of their food leaves the restaurant. Thus, operators as well as suppliers are looking beyond the actual packaging to tamper-evident labels and other options.

Design

There are both front- and back-of-house layout considerations. That includes the configuration and number of make lines, where delivery drivers will come to pick up food, how pickup guests get their food, the impact on dine-in guests and more.

To foster good relationships with drivers as well as not interfere with traditional guests, fast casual Mendocino Farms redesigned its vestibule area with a seating area for drivers. The area has a deeper inset, allowing for room for large pickup bags.

Others are putting in slightly simpler adjustments. Chicago-based Protein Bar, for example, added pickup shelves as part of a recent remodel. The shelves are adorned with different alphabetical breakdowns, so hurried customers and couriers know exactly which shelf to go to for their meals. Protein Bar labels the meals by name, but doesn’t bag food. Instead, guests who want a bag, as well as silverware and napkins, will find them below the shelves.

Similarly, in its most recent earnings call, Noodles’ Boennighausen said that off-premise sales represented about 53% of its third quarter sales, with online ordering performing particularly well. The chain is responding with some changes to its look. Earlier this year, it introduced quick pickup shelves to ease the takeout experience. It’s also started to develop smaller prototypes, which are expected to roll out in 2019.

Location

As Subway’s Walker told RB, not all sites are created equal. And with today’s high lease rates and competitive market, the chain performs a lot of analysis for each real estate decision, questioning how aggressive remodels should be, if it’s worth relocation and the overall best decision for the franchisee and the guest. Through this, it’s found success moving mature locations as close as within the same parking lot—a strategy that the brand has found to drive incremental business.

One real estate consideration that operators are grappling with when it comes to off-premise: parking spaces. Kitchen United, a commissary-style ghost kitchen that launched in Pasedena, Calif., earlier this year chose its first space, in part, because there are a number of dedicated spots for delivery drivers.

Often, especially with many footprints shrinking, the locations themselves cannot always handle delivery drivers and pickup customers without impacting the dine-in guest experience. So fast-casual Sweetgreen has re-evaluated location entirely. While in-store pickup is still available, the chain is taking its pickup shelves out of its stores through a test program called Outpost, which designates pickup areas inside of large office buildings. Diners who place orders via Sweetgreen’s app can grab their meal off the shelf without leaving work. The chain plans to open more than 200 Outposts by the end of next year; it currently has about 15, with 10 in WeWork co-working units.

Beverage sales

Losing a beverage sale can impact margins significantly, said Wilson. And, she added, it can impact marketing funding credits from beverage vendors. Technomic research shows that almost two out of three consumers of legal drinking age would order an alcoholic beverage from their favorite restaurant. For many brands, beverage delivery is seen as a potential way to convey the on-premise brand experience in consumers’ living rooms.

While there are tricky state and local regulations to consider, the other challenge is finding a way to make it profitable. Wilson wonders: Are consumers less likely to order a beverage delivered to their home at the marked-up price it would require to be sold at a profitable margin, especially when they can order at a lower price from Instacart or other retail delivery options? It’s something early testers, such as Pizza Hut and BJ’s Restaurant & Brewhouse, both of which are testing beer delivery, will see.

Labor

In the full-service space, there’s a question of who will package up orders, said Wilson. If an employee’s primary compensation is tips, and they are tasked to package off-premise orders, the driver is getting tipped for that order, not the server, she added. The brings into question the tip credit, as well as being a competitive employer. In the restaurant industry, where labor is already tight, third-party delivery services are becoming a potential competitor for workers. The pay can be about the same for some, but the schedule is much more flexible.